How will the equilibrium price of apples and the quantity of

How will the equilibrium price of apples and the quantity of apples sold in the U.S. be effected by these events?

1. A new federal program requires one apple to be included in each subsidized school lunch throughout the country.

2. A fungus wipes out many of the apple orchards in the state of Washington. (Washington produces well over 50% of the U.S. apple crop each year).

3. What will happen to the equilibrium price of apples and the quantity of apples sold in the United States if the events in 1 and 2 happen at the same time?

4. How will the two events in 1 and 2 affect the lives of vegetarians in the U.S.?

Solution

1. The new program increases the demand for the apples so the demand curve for the apples shifts to the right. When the demand curve shifts rights the price increases and the also the quantity sold.

2. So this event will definitely reduce the supply of the apples and the supply curve will shifts to the left. The result is a higher equilibrium price and reduced quantity of apples sold.

3. If the two events happens in the same time, the demand curve shifts to the right and the supply curve shifts to the left. The result is a higher equilibrium price and the quantity of apples sold remains the same.

4. So these two events bring up the prices of apples to a new high so the life of the vegetarians become more expensive.